Question

Journalize entries for the following related transactions of Lilly Heating & Air Company. Refer to the Chart of Accounts for exact wording of account titles. A. Purchased $36,000 of merchandise from Schell Co. on account, terms 1/10, n/30. B. Paid the amount owed on the invoice within the discount period. C. Discovered that $9,000 of the merchandise purchased in (A) was defective and returned items, receiving credit. D. Purchased $5,000 of merchandise from Schell Co. on account, terms n/30. E. Received a refund from Schell Co. for return in (C) less the purchase in (D).

CHART OF ACCOUNTS

Lilly Heating & Air Company

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
125	Notes Receivable
130	Inventory
140	Office Supplies
141	Store Supplies
142	Prepaid Insurance
180	Land
192	Store Equipment
193	Accumulated Depreciation-Store Equipment
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
211	Accounts Payable-Schell Co.
218	Sales Tax Payable
219	Customer Refunds Payable
220	Unearned Rent
221	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Rent Revenue

Answer 1

Transaction	Account Titles	Debit	Credit
		$	$
A.	Inventory ( $ 36,000 x 0.99)	35,640
	Accounts Payable: Schell Co.		35,640
	To record purchase of merchandise inventory on account
B.	Accounts Payable: Schell Co.	35,640
	Cash		35,640
	To record payment on account
C.	Accounts Receivable ( $ 9,000 x 0.99)	8,910
	Inventory		8,910
	To record purchase return
D.	Inventory	5,000
	Accounts Payable: Schell Co.		5,000
	To record purchase of merchandise inventory on account
E.	Cash	3,910
	Accounts Payable: Schell Co.	5,000
	AccountsReceivable		8,910
	To record refund of cash from supplier